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The Loonie is on the move today, likely on the spike higher in oil prices. Is this a momentum move in the works and is the support break EUR/CAD the real deal?

Before moving on, ICYMI, today’s Daily London Session Watchlist looked at an opportunity forming on EUR/JPY ahead of economic data from the euro zone, so be sure to check that out to see if there is still a potential play!

Equity Markets Bond Yields Commodities & Crypto
DAX: 9591.31 +0.49%
FTSE: 5513.16 +1.07%
S&P 500: 2514.55 +1.78%
DJIA: 21322.07 +1.81%
US 10-yr 0.616% -0.019
Bund 10-YR -0.438% +0.032
UK 10-YR: 0.329% +0.016
JPN 10-YR: -0.014% -0.02
Oil: 25.23 +24.22%
Gold: 1626.8 +2.22%
Bitcoin: 6782.21 +3.11%
Etherium: 139.19 +3.32%

Fresh Market Headlines & Economic Data:

Upcoming Potential Catalysts on the Forex Calendar for U.S. & Asia:

  • AIG Australian Construction index at 9:30 pm GMT
  • Australia Services PMI at 10:00 pm GMT
  • Australia Retail sales at 12:30 am GMT (Apr. 3)
  • Japan Services PMI at 12:30 am GMT (Apr. 3)
  • China Services PMI at 1:45 am GMT (Apr. 3)

What to Watch: EUR/CAD

EUR/CAD 1-Hour Forex Chart
EUR/CAD 1-Hour Forex Chart

On the one hour chart above, we can see a spike lower in EUR/CAD, likely on a couple of headlines that pumped up oil prices on the session. That jump in oil prices was likely a reaction to news of China buying up oil at these rock bottom prices, and on commentary from U.S. President Trump that Saudis and Russia will ease oil pressure. This fresh set of catalysts will likely have influence on the rest of the session, making the break below the psychological level of 1.5450 a legit breakdown.

If you’re a bear on the pair but want to be a little bit conservative with your entry, waiting for a retest back to 1.5450 is a viable entry option as profit taking could be quick given the bigger picture issues for oil (April demand set to plummet).

Another entry strategy to consider is a scale in from current levels up to the falling ‘highs’ to create a swing short position. This second option makes sense given the daily ATR of around 228 pips and the possibility of a true oil rebound after being crushed in February and March.

For the bulls on this pair, there isn’t much for a fundamental argument for a long position at the moment without a fresh catalyst (e.g., negative coronavirus / economic data updates, nothing on the calendar ahead) but if we do see one with a break above the falling trendline marked on EUR/CAD above, it may be time to consider a long position.